Raise defence spending to 3% of GDP

GDP benchmark

Reform's 2024 Contract proposed 2.5% of GDP by year three and 3% within six years. Current UK policy already targets 2.5% by 2027.

• Current policy targets 2.5% by 2027.
• Reform target reaches 3% within six years.
• Extra cost depends on baseline.

Core trade-offs

Defence suppliers and capability gain from higher spending. The cost falls on taxpayers or other services, and supply constraints can raise procurement prices.

• Defence capability and suppliers gain.
• Taxpayers or other departments fund it.
• Procurement bottlenecks can waste money.

Illustrative fiscal impact

+GBP 4.0bn to +GBP 18.0bn. Central estimate: +GBP 10.0bn.

• Positive numbers mean public-finance pressure; negative numbers mean Exchequer savings.
• 3% GDP target is the main scale marker.
• Gross costs and receipt offsets are separated in methodology.
• Behaviour and pass-through widen the range.
• This is not an official costing.

Economic impact by 2029-30

• Jobs: Supports defence manufacturing and military jobs, but draws resources from elsewhere.
• Wages: Specialist defence and engineering wages may rise in constrained supply chains.
• Prices: Procurement inflation likely if capacity is limited.
• GDP / productivity: Short-run demand rises; productivity gains depend on procurement quality and spillovers.

Assessment

Higher defence spending may be justified on security grounds, but it is a real fiscal choice. The target is expensive relative to the current 2.5% path and can be wasteful if procurement capacity, industrial strategy and personnel plans are weak. The GDP effect is not automatically positive.

Confidence: Medium. GDP-share targets are clear, but future GDP, NATO definitions and procurement capacity create uncertainty.

Main risks

• Procurement inflation: Rapid increases can raise prices when shipyards, munitions and skilled labour are constrained.
• Crowding out: Funding defence may require lower civil spending, higher taxes or borrowing.
• Target gaming: GDP-share targets can encourage spending to hit the metric rather than value.

Safeguards

• Publish a costed equipment and personnel plan.
• Phase spending through audited procurement gates.
• Separate NATO-definition spending from broader security spending.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology: Raise defence spending to 3% of GDP Internal - PolicyLens, 2026
• Measuring the Output Responses to Fiscal Policy Academic article - Auerbach and Gorodnichenko, American Economic Journal: Economic Policy, 2012
• Identifying Government Spending Shocks Academic article - Ramey, Quarterly Journal of Economics, 2011
• A brief guide to the public finances Fiscal forecast - Office for Budget Responsibility, 2026
• Our Contract with You Party policy document - Reform UK, 2024
• UK defence spending Parliamentary briefing - House of Commons Library, 2025
• Strategic Defence Review 2025 UK government report - Ministry of Defence, 2025
• Our Policies Party policy source - Reform UK, 2026

Other Reform UK policies

• Raise income-tax thresholds
• Cut household energy taxes
• Cut fuel duty by 20p
• Cut stamp duty below GBP 750,000
• Raise inheritance-tax threshold to GBP 2m
• Cut corporation tax to 15%
• Raise VAT threshold to GBP 150,000
• Abolish IR35 rules